Abstract: Spatial-dynamic processes in renewable resource economics pose difficult conceptual, analytical, empirical, and institutional challenges that are distinct from either spatial or dynamic problems. We describe the challenges and conceptual approaches using both continuous and discrete depictions of space and summarize key findings. Using a metapopulation model of the fishery and simulated economic and ecological data, we show that it is possible in certain circumstances to recover both biological and economic parameters of a linked spatial-dynamic system from only economic data. We illustrate the application empirically with data from the Gulf of Mexico reef-fish fishery. We conclude with a discussion of key policy and institutional design involved in managing spatial-dynamic systems.

Abstract: Marine scientists and policymakers are encouraging ecosystem-based fishery management (EBFM), but there is limited guidance on how to operationalize the concept. We adapt financial portfolio theory as a method for EBFM that accounts for species interdependencies, uncertainty, and sustainability constraints. Illustrating our method with routinely collected data available from the Chesapeake Bay, we demonstrate the gains from taking into account species variances and covariances in setting species total allowable catches. We find over the period from 1962–2003 that managers could have increased the revenues from fishing and reduced the variance by employing ecosystem frontiers in setting catch levels.

Abstract: Individual fishery quotas (IFQs) are an increasingly prevalent form of fishery management around the world, with more than 170 species currently managed with IFQs. Yet, because of the difficulties in matching quota holdings with catches, many argue that IFQs are not appropriate for multispecies fisheries. Using on-the-ground-experience with multispecies IFQ fisheries in Iceland, New Zealand, Australia, and Canada, we assess the design and use of catch-quota balancing mechanisms. Our methodology includes a mix of interviews with fishery managers, industry representatives, and brokers; literature review; and data analysis. We find that a combination of incentives and limits on use rates for the mechanisms provide sufficient flexibility to the quota owner without the fishery manager incurring excessive levels of overexploitation risk. Contrary to some opinions, these programs are evidence that it is possible to implement IFQ programs for multispecies fisheries and that they can be profitable and sustainable.

Abstract: We investigate the applicability of the present-value asset pricing model to fishing quota markets by applying instrumental variable panel data estimation techniques to 15 years of market transactions from New Zealand’s individual fishing quota market. In addition to the influence of current fishing rents (as measured by lease prices), we explore the effect of market interest rates, risk, and expected changes in future rents on quota asset prices. Controlling for these other factors, the results support a fairly simple relationship between quota asset and contemporaneous lease prices. Consistent with theoretical expectations, the results indicate that quota asset prices are positively related to declines in interest rates, lower levels of risk, expected increases in future fish prices, and expected cost reductions from rationalization under the quota system. However, the magnitude of some interrelationships is muted relative to what theory suggests, possibly due to measurement error.

Abstract: Economic analyses of climate change policies frequently focus on reductions of energy-related carbondioxide emissions via market-based, economywide policies. The current course of environment andenergy policy debate in the United States, however, suggests an alternative outcome: inefficientlydesigned and/or sector-based policies. This paper uses a collection of specialized, sector-based models inconjunction with a computable general equilibrium model of the economy to examine and compare thesepolicies at an aggregate level. We examine the relative cost of different policies designed to achieve thesame quantity of emissions reductions. We find that excluding a limited number of sectors from aneconomywide policy does not significantly raise costs. Focusing policy solely on the electricity andtransportation sectors doubles costs, however, and using nonmarket policies can raise costs by a factor of10. These results are driven in part by, and are sensitive to, our modeling of preexisting tax distortions.

Abstract: Habitats and the services they provide are part of our nation’s portfolio of natural capital assets.As for many components of this portfolio, it is difficult to assess the value of their services, and thiscomplicates regulators’ investment decisions, especially when the alternative use is measurable. Theprincipal objective of this report is to suggest possible strategies for the National Marine Fisheries Service(NMFS) as it applies economic analyses and arguments in support of the agency’s trustee responsibilities.Many approaches are possible, and as we discuss, the “right” strategy will depend on the questions asked,the resources available, and the agency’s role in the consultation process. We discuss in detailbioeconomic modeling and ecosystem indicator approaches to habitat value assessment. Although theapproaches are discussed independently, multiple tools could be used simultaneously across differentregions or within the same region on different aspects of one consultation.

Abstract: Over 300 natural scientists in 53 nations are taking part in the Census of Marine Life (CoML) to investigate what lived, what lives, and what will live in the oceans. The CoML is a scientific experiment that is exploring the limits of ocean science. The paper discusses the potential applications of CoML research and the mechanisms by which the potential benefits can be measured and preserved. I recommend developing and integrating policy advisory committees with the natural science activities to both maximize the benefits of the research and to avoid unintended consequences.

Abstract: Marine reserves are gaining attention around the world as a tool to both conserve ocean resourcesand improve the productivity of fisheries. Using simulation analysis, we investigate in a limited-entryfishery comprising nine subpopulations the inherent bioeconomic trade-offs associated with cost-effectivedesigns of marine reserve networks—that is, the trade-offs between the degree of connectedness of a siteand the biological and economic heterogeneity. We find in many cases that closing two low-value patchescan result in larger biological gains and lower costs than closing one high-value patch. We also simulatebiological productivity effects after creation of a reserve and find that under special conditions, aggregatesustainable rents are maximized with the closing of a portion of the fishable habitat. Finally, we find thatthe biological gains of implementing a more rationalized management system can outweigh the gainsfrom closing multiple subpopulations under open access.

Abstract: Fisheries worldwide continue to suffer from the negative consequences of open access. In 1986, New Zealand responded by establishing an individual transferable quota (ITQ) system that by 1998 included 33 species and more than 150 markets for fishing quotas. We assess these markets in terms of trends in market activity, price dispersion, and the fundamentals determining quota prices. We find that market activity is sufficiently high to support a competitive market and that price dispersion has decreased over time. Using a 15-year panel dataset, we also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices, ecological variability, and market interest rates. Controlling for these factors, our results show an increase in quota prices, consistent with increased profitability. Overall, the results suggest these markets are operating reasonably well, implying that ITQs can be effective instruments for efficient fisheries management.

Abstract: This paper is a guide for citizens, scientists, resource managers, and policy makers, who are interested in understanding the economic and social value of marine protected areas (MPAs). We discuss the potential benefits and costs associated with MPAs as a means of illustrating the economic and social tradeoffs inherent in implementation decisions. In general, the effectiveness of a protected area depends on a complex set of interactions between biological, economic, and institutional factors. While MPAs might provide protection for critical habitats and cultural heritage sites and, in some cases, conserve biodiversity, as a tool to enhance fishery management their impact is less certain. The uncertainty stems from the fact that MPAs only treat the symptoms and not the fundamental causes of overfishing and waste in fisheries.

Abstract: We utilize a spatial bioeconomic model to investigate the impacts of creating reserves on limited-entry fisheries. We find that reserve creation can produce win-win situations where aggregate biomass and the common license (lease) price increase. These situations arise in biological systems where dispersal processes are prevalent and the fishery prior to reserve creation is operating at effort levels in a neighborhood of open-access levels. We also illustrate that using strictly biological criteria for siting reserves (e.g., setting aside the most biological productive areas) will likely induce the most vociferous objections from the fishing industry. In general, we find that the dispersal rate and the degree the patches are connected play a significant role on the net impacts on the fishing sector.

Abstract: Marine protected areas (MPAs) are currently receiving considerable attention as a "new" tool to control overexploitation. Many advocates argue that MPAs will provide a plethora of benefits ranging from improved habitat to higher fish stocks with little costs. Fishermen argue, not surprisingly, that the costs resulting from closing areas could be significant and need to be considered in the debate. In this paper, a set of biological, industry, and management hypotheses drawn from the literature analyzing the effects of MPAs are discussed. In doing so, a framework is presented that can be used to assess the expected returns to society from investing in MPAs.

Abstract: We present a bioeconomic model of a harvesting industry operating over a heterogeneous environment comprised of discrete biological populations interconnected by dispersal processes. The model generalizes the H. S. Gordon [1954]/V. Smith [1968] model of open-access rent dissipation by accounting for intertemporal and spatial "Ricardian" patterns of exploitation. This model yields a simple, but insightful, framework from which one can investigate factors that contribute to the evolution of resource exploitation patterns over space and time. For example, we find that exploitation patterns are driven by biological and fleet dispersal and biological and economic heterogeneity. We conclude that one cannot really understand the biological processes operating in an exploited system without knowing as much about the harvesting system as about the biological system.

Abstract: This paper employs a spatial and intertemporal model of renewable resource exploitation to investigate the effects of marine reserve creation. The model combines the H. S. Gordon/Vernon Smith hypothesis of a rent dissipation process with Ricardian notions that resources are exploited across space in a pattern dependent upon relative profitabilities. The metapopulation model employed here incorporates modern biological ideas that stress patch heterogeneity, linkages, and dispersal processes between patches. The spatial bioeconomic model is then used to simulate the effects of reserve creation under various ecological structures. We find, under certain parameter configurations and ecological linkages, that there is potential for a "double-dividend" where both aggregate biomass and harvest increase after an area of the fishery is set aside and protected from exploitation.